Executive Director, Bruce Iwasaki

Strategy for Tough Times

December 30, 2002

At the outset of 2002 I was telling people that it would be a tough year. But this year actually turned out to be remarkably successful. For example, in a year in which many non-profit organizations were seeing declines in contributions, LAFLA did better than hold its own. We had our most successful law firm campaign in over ten years, raised more money with the Grand Cru than ever before, and had our highest grossing Access to Justice dinner ever, exceeding our budgeted revenue targets for each. We initiated an Associates campaign among major law firms. We have also taken steps toward a capital campaign that will replace or renovate our owned buildings in the coming years.

LAFLA also succeeded in obtaining new grants for assisting victims of human trafficking, increased our funding from the City of Los Angeles, and renewed funding from L.A. County for domestic violence advocacy, the Department of Justice for victims of torture, and new projects under the Equal Access Partnership grants. We will also receive Proposition 10 funds to help support our lead poisoning prevention work.

This year our firm increased the breadth of impact advocacy. We expanded systemic litigation and policy advocacy in housing, redevelopment, and health care access. More staff-written articles have appeared in the Los Angeles Daily Journal than ever before. And we have greatly expanded our pro bono recruitment program.

Challenge of 2003

Despite these successes, we will have to redouble our efforts in 2003. Next year will be tough; 2004 will be very tough. We will have to practice excellent systemic advocacy, convey our clients' stories through all media, and use those stories to raise funds -- all just to stay even.

LAFLA had budgeted a daunting $450,000 deficit in 2002. We will actually do slightly better than that, but still dip deeply into reserves. On top of that we lost $400,000 annually in IOLTA funding because of the drop in interest rates. We still decided to increase salaries last year and next year. We view the salary increases as vital to recruit and retain the best staff, an investment in the long term development of a great law firm. (This goes against the sorry practice of underpaying in legal services nationally. The average salary for staff attorneys with six to seven years of experience in LSC programs is $40,719.)

The uncertainties of 2003 begin with the prospects for our largest funding sources. Each is vulnerable.

LSC

In 2003 we expect to receive a roughly one million dollar increase in LSC funds. This is very welcome, even though it means that other programs around the country are getting cut. Because there has been no national increase in money appropriated to LSC, the increase to LAFLA is due to the increase in the local poverty population during the 1990s. Nevertheless, it is not the bonanza one might think. It barely exceeds the two years of reductions in IOLTA funding. It is also less than I would have expected given that on average, the LSC funding increase in California was over 22 percent. LAFLA's increase was only 16.5 percent, in part because the increase in poverty spread to the San Gabriel Valley and other suburban areas more than it increased in the city core.

The real test with respect to LSC, however, will be the fiscal year 2004 appropriations. The burgeoning federal deficit due to tax cuts and increased military and homeland security spending will put pressure on funding for LSC. This is the first time in the history of LSC that the White House and both Houses of Congress will be controlled by the Republican Party. Accordingly, the national equal justice community will be tested: have we built the bridges needed to establish legal services as a truly bipartisan program?

IOLTA

This week the U.S. Supreme Court heard arguments in the challenge to the Washington State IOLTA program. The media reported that the Court was sharply divided. It appears that Justice Kennedy, a potential swing vote, is very skeptical of the program's constitutionality, but that Justice O'Connor's questions hinted that she doubted any compensation was due when the property taken has no value. This case will have profound importance to civil legal aid throughout the country. We will have an answer later in the spring.

Equal Access Funding

The Equal Access Fund comes from state general revenues. This week the governor proposed enormous mid-year budget cuts (proposals have not yet reached the detailed level of the EAF) and next year's state fiscal situations will be, if anything, even more severe. We in the state legal services leadership are trying to increase awareness about the unmet legal needs of the poor. The five year review of equal justice in the state, "The Path to Equal Justice," released last month, is part of that effort. We will try to fend off cuts, but as in the other areas, any significant increase in overall appropriations is unlikely.

Costs and Prospects

On the other side of the ledger, our brokers have warned us to expect significant insurance cost increases, especially in workers compensation and health insurance. These are trends that will not go away and will call for serious examination of our budget and benefits package.

We seek to manage all of this without involuntary staff reductions. We can do this if certain assumptions come to pass:

The large funding sources remain stable for the next two years.

We greatly expand private fundraising.

We hold the line on non-personnel spending.

We have attrition of positions equal to six fewer staff at the end of 2004.

If all of these assumptions hold, we hope to break even in 2003. But will still project a significant deficit in 2004.

Building on Our Stories

What is the strategy to deal with this uncertainty? We need to advance to the next step in communicating the benefits of our work for clients.

For the past couple years we have improved our capacity to be a client-story machine. Our stories about what we did for clients are up on the web, in our video and annual report, in our newsletter, and sometimes picked up by the media. LAFLA's profile is much higher than it used to be.

We still need work on this. Our problem, ironically, is that we are too knowledgeable, too close to the situation. This means we overlook the significance of what we do everyday, and sell ourselves short. It also means we misgauge our audience, and thus issue press releases that are too long, give presentations that are too detailed, and print leaflets that are not well designed. ("LAFLA files writ of prohibition in appellate department" was actually the headline of a press release a year or so ago.) But while we can always improve in the way we communicate, we have made great strides in realizing the importance of doing so. Yet there is more we need to do.

We have to transform knowledge into persuasive power. We know a whole lot. We know the law. We know how clients are harmed by practices of the welfare department, the courts, the banks, the schools, and other agencies. We are regarded as experts because of this knowledge. But being the most knowledgeable does not necessarily mean being the person who gets ideas adopted, policy changed, funds delivered.

In summary: If we seek funds for what we decide is important, and demonstrate by our knowledge and creativity the outcomes clients achieve, we will increase our odds of both being funded and accomplishing our substantive goals. And if we then capture the outcomes from the clients' perspectives and tell those stories well -- publicize the results of our work not only to the funders but to the public -- I believe we will enhance our profile as regional and national leaders.

It is my belief that our enhanced reputation will yield increases in our unrestricted funding. Individuals, corporations, foundations and law firms will invest in LAFLA if we show we are a worthy investment: a state of the art law firm. In this way, I suggest, securing specialized funding can help increase our overall funding. The result will be expanded resources for all of our work, diversifying our revenue mix, avoiding being driven by specialized funders as opposed to community priorities, and being a more potent force for changing our clients' lives.

BGI